Sizable increases in advertising rates will help newspaper and broadcasting companies ride out a recession in 1980 without severe problems, but it won't be an easy year, a meeting of security analysts was told yesterday.
The Washington Post Co.'s earnings for the first quarter of 1980 will be substantially below those for the same quarter a year ago, said Katharine Graham, chairman of the board.
Company earnings are being depressed by the costs of several new projects, she said, including the $65 million satellite printing plant scheduled to open in Northern Virginia in September, a new monthly sports magazine published by Newsweek Inc. and a newsprint mill in Doswell, Va., in which The Post has a 30 percent interest.
"I remain hopeful that 1980 as a whole is going to be a good year," said Graham. She said that the Washington Post newspaper's advertising rates have been raised 13 percnet in a series of increases since Jan. 1, with an increase in linage of 5.3 percent in the first quarter.
"In this rather peculiar time in our nation's economic history, selling more newspapers and printing more ads in them turns out for the moment to be a mixed blessing," she added.
The cost and availability of newsprint remain major problems, executives of The Post and other news organizations told the security analysts.
"We have been counting our newsprint supply by days, at times by the hours," said Donald E. Graham, publisher of The Post. The slowing of the economy, reflected in modest growth in advertising linage, is easing the situation now, he said.
The Wall Street Journal excepts to cut back its booming circulation to lessent the impact of newsprint and postage costs, said Dow Jones & co. Chairman Warren H. Phillips.
The Journal's circulation reached 1.9 million on March 31 compared with 1.7 million in December, and the Journal lacks sufficient newsprint to handle such increases. "We're going to cool that growth down a bit," said Ray Shaw, Dow Jones president.
The Wall Street Journal's advertising linage was up 5.5 percent on an annual basis in March, compared with a 21.9 percent increase in February. The company, which increased ad rates 10.8 percent in January, is "seriously considering" further increases this year.
James H. Ottaway Jr., chairman of the company's Ottaway Newspapers group, said Dow Jones is sponsoring an experimental broadcasting service to 23,000 cable television subscribers in the Danbury, Conn., area.
Gannett Co. Inc. will raise ad rates by about 9 percent this year to maintain earnings growth in the face of inflation, Chairman Allen H. Neuharth said.
Douglas H. McCorkindale, Gannett's chief financial officer, said the ability of newspapers to raise ad rates even in an economic slowdown provides some insulation against double-digit inflation.
"We can pass through inflationary costs with less resistance and bring these kind of numbers down to the bottom line," McCorkindale said.
Neuharth said the recession in 1974-75 didn't do much damage to his company. "We had a little dip in the rope," he said. "We're not nervous" about 1980, he added.
Although continued expansion by acquisition is always under study, Gannett began publishing a new morning paper, Eastbay Today, in the Oakland, Calif., area. It now has a paid circulation of 54,000.
Major newspaper companies gladly would pay between $30 million and $40 million to acquire a newspaper that size, Newharth said. Eastbay Today was established at a fraction of that cost, he added.